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Dimensions of Organizational
Structure
•
•
•
•
•
•
Hierarchy of Authority
Degree of Centralization
Complexity
Specialization
Formalization
Professionalism
Functional Structure for a
Hotel
General Manager
Marketing
•Sales managers
HR
Rooms
F&B
Accounting
•Controller
•Reservations
•Food
Production
•Housekeeping
•Restaurants
•Systems
•Training
•Front office
•Benefits
•Room service
•Banquets
•Purchasing
Functional Structure
• Organizing Framework
› Inputs such as rooms and food and beverage
• Degree of Centralization
› High centralization
• Competitive Environment
› Stable, demands for internal efficiency or functional
specialization
• Growth Strategy
› Market penetration
Functional Structure
• Strengths
› Economies of scale
› Functional expertise and specialization
› Best if few products or services
• Weaknesses
›
›
›
›
Slow response time
Hierarchy overload
Sometimes poor coordination across departments
Can restrict view or broader organizational goals
Geographic/Customer-based
Structures
Vice President
Administrative Support
Western Region
Marketing
Eastern Region
Operations
Marketing
Operations
Vice President
Administrative Support
Economy Travelers
Marketing
Operations
Luxury Travelers
Marketing
Operations
Geographic/Customer-based
Structures
• Organizing Framework
› Outputs such as location or customer groups
• Degree of Centralization
› Decentralized
• Competitive Environment
› Dynamic with pressure to satisfy particular market needs
very well
• Growth Strategy
› Market and/or product development
Product/Market Structure
• Strengths
›
›
›
›
Suited to fast change in an unstable environment
High levels of customer satisfaction
High coordination across functions
Best in larger organizations with several locations or
customer groups
• Weaknesses
›
›
›
›
Loss of economies of scale within functional areas
Some redundancy of functions
Loss of in-depth functional specialization
May lead to poor coordination across locations or
customer groups
Project Matrix Structure
General Manager
Support
Functions
Project
Manager A
Project
Manager A
Project
Manager A
Marketing
Manager
R&D
Manager
Operations
Manager
Project Matrix Structure
• Organizing Framework
› Inputs and outputs
• Degree of Centralization
› Decentralization with shared authority
• Competitive Environment
› Responds well to internal pressure for
efficiency or specialization AND external
market pressure to satisfy particular market
needs or customers
• Growth Strategy
› Frequent changes to products and markets
(allows flexible use of human resource)
Project Matrix Structure
• Strengths
› Achieves coordination
› Flexible use of human resources
› Works well in medium-sized firms with
multiple products
• Weaknesses
› Dual authority can cause frustration and
confusion
› Excellent interpersonal skills needed
› Additional training can be expensive
› Time consuming, frequent meetings
› Great effort to maintain power balance
Corporate Structures
Multidivisional
CEO
Corporate Staff
Division VP
Division VP
Division VP
› Few businesses compared to the other corporate
structures
› Moderate/low relatedness across divisions
› Moderate/low need for coordination across divisions
› Financial synergy may be available across divisions
and some operational synergy (although limited) only
to the extent that the divisions are related to each other
Corporate Structures
Strategic Business Unit
CEO
Corporate Staff
SBU Manager
SBU Staff
Related Divisions
SBU Manager
SBU Manager
SBU Staff
Related Divisions
SBU Staff
Related Divisions
› Many businesses, some of which are related to each other
› Groups (SBUs) of related businesses
› Coordination needed within each SBU; low need for
coordination across SBUs
› Financial synergy across SBUs, potential exists for
operational synergy within SBUs
Corporate Structures
Matrix
CEO and Staff
Division 1
Division 2
Marketing
Operations
R&D
› Any number of businesses
› Highly related businesses so people can easily transfer
› Very high level of coordination is required
› Many opportunities exist for operational synergies (for
innovation, to reduce costs, or serve multiple markets
well)
Steps in Developing a Feedback
Control System
• Determine Broad Goals
• Establish Links Between Broad Goals and
Resource Areas or Activities of the
Organization
• Create Measurable Operating Goals for Each
Resource Area or Activity
• Assign Responsibility for Goal
Accomplishment
• Develop Specific Action Plans
• Allocate Resources
• Follow Up
Feedback Controls
Performance
Feedback
Compare
Goals to
Outcomes
Organizational
Outcomes
Feedback Control
Establish
Strategic
Direction
Formulate
Basic
Strategies
Implementation
Strategies and
Controls
Goals and
Objectives
T
I
M
E
The Five Phases of Crisis
Management
•
•
•
•
•
Signal Detection
Preparation / Prevention
Containment / Damage Limitation
Recovery
Learning
Preventing and Controlling Crises
•
•
•
•
•
Strategic Actions
Technical and Structural Actions
Evaluation and Diagnostic Actions
Communication Actions
Psychological and Cultural Actions
Major Concepts found in Chapter 8
• Centralization, formalization, specialization, and other
key dimensions are important to characterizing
organizational structures.
• In structuring relationships among multiple business
units, managers attempt to create either independence,
so that organizations are unencumbered, or
interdependence, to exploit operating synergies.
• Strategic controls consist of systems to support
managers in tracking progress toward organizational
vision and goals and in ensuring that organizational
processes and the behavior or organizational members
are consistent with goals.